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Steady US earnings help start Mexican businesses

People who send money to Mexico do so for any number of reasons. These can range from helping with housing and rent costs, buying food or purchasing necessary supplies. In many situations, however, people coming from Mexico to the U.S. are able to use their earnings to start businesses back home and improve their local communities.

For years, Mexican immigrants have worked in the U.S. and sent money back home to their families. However, for some of these workers, those savings have allowed them the opportunity to go home to Mexico and start businesses of their own, The Washington Post reports.

One of the prime examples of this trend is Santa Maria del Refugio, which at one time was a very rural area. The growth of businesses, such as the one started by Roberto Mandujano, have transformed it into a suburban community of more than 2,500 people.

"Look at this place – it's practically a city now," Mandujano, who moved back to his home town and opened a hardware store in 2007, told the Post. "There was nothing here when I left."

Those new businesses have help to jump-start a middle class in Mexico, helping to reduce poverty levels in many parts of the country.

Part of the reason for the recent shift, according to the paper, has been that Mexico has been more stable in recent years. In past decades, residents of Mexico City dealt with major earthquakes, while past national economic issues have also caused problems. Now, the remittances sent home can help improve residents' quality of life instead of just getting them through emergency situations.

Santa Maria business owner Fernando Muñiz is another example of the trend. After working in the U.S. for a number of years, he has now moved back home, opened an internet cafe and market and owns his own home. He also told the Post that he felt great pride in the fact that his son is able to use a computer at age 6 – a skill which took him until age 28 to learn.

The paper also detailed the story of Luciano Figueroa. After bringing home $8,000 from his work in the U.S., he and his brothers were able to purchase a number of cattle and open a butcher shop. They now also own a restaurant and employ almost 50 people.


Remittances hang tough despite financial crisis

While much of the world has been adversely affected by the global recession that’s been ongoing for the past several years, it hasn’t led to a decline in remittance volume, nor increased the flow of foreign workers leaving the U.S. for their home countries.

According to a new book, “Migration and Remittances during the Global Financial Crisis and Beyond,” which was recently released by the World Bank, migrant workers have largely been able to weather the storm brought on by the global financial crisis, which economists trace back to the end of 2008 and beginning of 2009. The book also indicates that even though the fallout from the recession has been significant, it likely could have been a lot worse, as foreign workers tend to be more willing to work for lower wages.

Despite immigrants’ ability to soften the blow caused to the economic meltdown, families have still felt the pinch, as many have been forced to cut back on their expenses, the report noted. Remittances and foreign workers who transfer money abroad, however, has enabled families to rely on an additional source of income.

“During the crisis, remittances continued to provide a steady source of foreign currency to developing country economies at a time when foreign aid remained flat and foreign direct investment declined sharply,” said Otaviano Canuto, the World Bank’s vice president of poverty reduction and economic management.

The book also indicates that while employment prospects in the world and the U.S. still have room to improve, remittances are nevertheless expected to increase in 2012. Projections indicate that foreign workers will send close to $400 billion home to their families, which is well above the $372 billion sent last year.

Hans Timmer, director of development prospects at the World Bank, reiterated that remittances have largely been able to withstand the economic collapse.

“The resilience of remittances is good news for developing countries as they remain one of the less volatile sources of foreign exchange earnings, particularly for the less developed countries,” said Timmer. “At the household level, these cash transfers are, in many cases, the only lifeline for families in the home countries.”

During previous recessions, many foreign workers have returned to their home country as a result of layoffs or other financial difficulties. That hasn’t been the case this time around, though, as noted by one of the co-authors of the book, Ibrahim Sireki, professor of transnational studies and marketing at Regent’s College in London. He said that in contrast to what many people were expecting, foreign workers have largely remained where they are, despite employment conditions worsening in many countries like the U.S. For those who did leave, however, some countries offered financial incentives for them to return.

With many economic indicators moving in a positive direction, the hope is that remittance volume will grow, but it’s encouraging to know that people have continued to send money to their families even though times have been tough.


Remittances boom thanks to generosity of others

While it's typically family members and loved ones who send money to those they care for, they also originate from perfect strangers who simply want to help others who may be less fortunate. And as a new report indicates, their generous donations were significant in 2010.

According to the Hudson Institute's Center for Global Prosperity and its report, "2012 Index of Global Philanthropy and Remittances," money transfers from the developed to the developing world have been considerable totaling approximately $246 billion in 2010, nearly double the amount of government aid that was sent at $128 billion.

"Our latest research shows that private philanthropy and remittances to the developing world now dwarf official government aid," noted Carol Adelman, the Hudson Institute Center's director.

In addition, private capital investment flow was also significant, reaching $329 billion from 2009's $228 billion.

All together, private financial remittance flows in 2010 amounted to $575 billion, accounting for a whopping 82 percent of developed countries' financial interactions with those other nations.

Government aid also expanded to $128 billion, but took up just 18 percent of international economic dealings and development assistance.

The report also looked at what countries the remittances originated from. Not surprisingly, much of it was from the United States, accounting for just under $96 billion in total remittances, and $161 billion in private investment capital.

In addition, the report noted that U.S. official aid trended higher, topping more than $30 billion, but made up 9 percent of the U.S.' total economic interaction with developing nations.

Adelman suggested that the generosity of the world could have a significant impact on decreasing the rate of poverty that's prevented so many people from living a better life.

"Our new data suggest that the ever-growing foreign aid architecture of private actors, transparency, and empowered local citizenry may well be making inroads against poverty in ways that surprise even the experts," Adelman. "The recently-released World Bank report found a broad reduction in poverty around the world over the last 30 years and confirmed that, contrary to predictions by the World Bank itself, the global recession did not increase poverty in developing countries."

Xoom can help improve individuals' financial condition as well. After signing up and logging in, you can send money to a friend, relative or distant cousin so that they can put the money to better use for themselves and their family.


Filipino remittances take off in January

A new report indicates the availability of cash has risen in the Philippines, largely as a result of more remittance flows.

According to recently released figures from the Bangko Sentral ng Pilipinas, domestic liquidity increased in January, up more than 6 percent when compared with the same month in 2011 and 1 percent ahead of the previous month's pace. "Liquidity" is a technical term which basically refers to the availability of cash in a country's economic marketplace.

One of the reasons for the increased supply of money was an increase in net foreign assets, which jumped 13 percent on a year-over-year basis and 14 percent compared to December. However, the primary driver of greater was due to money transfers in the form of remittances sent home by Filipinos living in other parts of the world, such as the United States.

The report noted that as a result of the increased flow of cash, officials should be optimistic that consumption and investment activity will pick up, which should help stir the country's economy.

"The steady growth in domestic liquidity indicates that liquidity in the financial system can amply fund the economy’s growth requirements," the report stated.

According to the Philippine Daily Inquirer, government officials in the Philippines believe the country's economy will expand between 5 and 6 percent this year, well ahead of last year's 3.7 percent growth.

In a separate report also released by the BSP, remittances in January surged to $1.6 billion, rising for sea- and land-based workers by nearly 20 percent and 1.6 percent, respectively, on a year-over-year basis. The report also detailed the countries in which the money transfers came from. More than 60 percent originated from seven countries – the U.S., Canada, Saudi Arabia, the United Arab Emirates, Italy, Japan and the United Kingdom.

What may help explain the considerable rise in remittances may have something to do with high demand for professional and skilled Filipinos who were looking for work. According to data from the Philippine Overseas Employment Administration, processed job orders totaled nearly 22,700 over the course of January and February. Demand for workers was particularly high in the Middle-East, specifically countries like Saudi Arabia, UAE, Qatar and Kuwait, BSP reported.


Caribbean, Latin America remittances totaled more than $60 billion last year

A new study suggests many immigrants from Latin America and the Caribbean used much of their earnings to send money to their home countries in 2011.

According to the Multilateral Investment Fund, which is a division of the Inter American Development Bank, remittance flows to Latin America and Caribbean islands totaled an estimated $61 billion, up 6 percent when compared to the previous year, when just under $58 billion was sent.

The report noted that this is the second straight year in which money transfers increased, as in 2009, remittances fell by double-digits compared to the previous year.

"For the remittance market in Latin America and the Caribbean, 2011 was a year of renewed growth after the 2008-2010 period, despite persistent economic uncertainty in Europe," the report stated.

It added that remittance flows should continue to operate in positive territory, as remittances in 2012 to Caribbean and Latin American localities are expected to mirror how they fared last year.

The report also detailed where remittances originated from. As with previous years, the overwhelming proportion of payments were sent from the U.S., accounting for roughly three-fourths of all remittances.

The same could not be said for countries throughout Europe, as the debt crisis there and a persistently high unemployment rate forced many immigrants to limit their wire transfers. This may help explain why Brazil saw fewer remittances, the only Latin American nation where earnings diminished, the report noted, which dropped 5 percent to approximately $2 billion.

While Brazil's economy is considerably better than many other countries in South America and Latin America at large, the report stated that remittances play a significant factor in the country's overall economic health.

"The importance of these flows lies in the vital role they play for millions of recipient families that depend on remittances for basic needs, even in countries with higher GDP levels," the report said. "In the absence of this regular source of income that these families receive from their family members abroad, many would fall below the poverty line."

As more countries have become less dependent on remittances thanks to the expansion of certain industries, the report stated that several countries still rely on remittances. For example, in Haiti, more than 25 percent of the nation's income originates from remittances, with cash flows representing roughly 10 percent of other countries' gross domestic product. GDP is defined as the total value of a country's goods and services produced in a given year.


Jamaica remittance activity expected to jump this year

If you've ever visited Jamaica or are from the island nation, you're no doubt well aware that a considerable portion of its economy comes from tourism, as millions of visitors every year come to Jamaica to enjoy the crystal clear Caribbean waters. But as government statistics indicate, Jamaica's economy is also heavily reliant on various forms of remittance. And according to a new report, expectations are high that 2012 will be a year in which many people send money to Jamaica.

After a year in which Jamaica received more than $2 billion in remittances, money transfer companies working in the country tell the Jamaica Gleaner that they expect 2012 to outdo 2011.

Noel Greenland, a local remittance expert, told the news source that the projected rise in money transfers stems from a better job market in the United States that has helped many Jamaican immigrants. But even if the job situation wasn't improving, money flows would likely still be operating at a healthy rate since most money sent back is needed.

"Since the majority of remittances that come into Jamaica may be described as non-discretionary transfers – that is to say, money is sent for daily care purposes, example, spouse, children and parental care – this form of remittance will continue, even if there is a recession," said Greenland.

Many Jamaican banks that receive remittances from individuals living outside the country have reported a surge in remittances, despite 2012 being only a few months old. For example, Natasha Service, general manager for a local transfer company, told the newspaper that the company has seen remittance flows – both in value and in number – that are 17 percent ahead of last year's pace.

"In 2012, we expect to see further increases in the volumes and values of transactions, continuing the trend that started in 2010 following the 2009 downturn," said Service.

In addition to a better job market, the Bank of Jamaica noted in a December report that remittance flows will likely increase in 2012 because of technological advancements, The Gleaner points out. This includes there being a surge in more remittance service providers in recent years, as well as more avenues in which Jamaican natives can send money online, such as through mobile devices.  


Jamaica remittances jump in 2011

While Jamaica is one of the more beautiful countries in the world, natives of the island nation often leave the country to pursue employment opportunities in other parts of the world. But as with many other foreign workers, they send money home to their families so that they can live more comfortably. And according to a recent report from the Bank of Jamaica, remittance flows were considerable during the most recent fiscal year.

According to the BOJ's Remittance report, between April and November of last year, remittance inflows to Jamaica totaled more than $1.34 billion. That's an increase of more than $86 million when compared to the same eight-month time period in 2010.

In addition to an increased value of remittances in the last fiscal year, they were particularly plentiful in November. The BOJ report notes that in November alone, net remittances were more than $133 million, a near 3 percent increase when contrasted with the same month in 2010, or what amounts to an improvement of just over $3.5 million.

As for the first 11 months of 2011, BOJ reports that net remittances amounted to $1.5 billion, close to 7 percent more than 2010, which translates to an increase of $102 million.

As for gross remittance totals received – which measures the total amount of income Jamaica received without taking into account taxes and fees – the country received more than $1.8 billion. That represents the highest average of gross remittances Jamaica has received in the previous five years.

The source of these remittances came from chiefly from Jamaica natives who sent a money transfer to a remittance company. However, they some people may have also sent money through the mail or workers delivering it to their families in person when visiting.

Jamaican natives have fanned out to many countries around the world looking for employment. As such, remittances were sent from various countries last year, including Canada and those within the United Kingdom. However, for the most part, remittance flows predominantly originated from the United States last year. BOJ also indicated that this reality suggests economic conditions may be improving in the U.S., as the country has experienced significant economic downturn in the aftermath of the recent housing crisis. As a result, the rate of unemployment has been in an elevated territory.


India remittance totals neared $60 billion last year

In what's been an ongoing trend, remittance flows have been on the increase in many countries recently, the latest one being India, according to reports from the World Bank.

World Bank estimates indicated that more migrant workers are sending money home to their families living in India, as last year, more than $57 billion was sent to the country, 7 percent more than the previous year.

In an interview with the Business Standard, Sajjid Chinoy, an economist with JP Morgan in India, said the higher remittance totals were not unexpected.

"Given the correlation between the currency and remittances, the latter's rise is not surprising in the second half of the year, given the sharp depreciation in the currency," said Chinoy.

According to the source, the value of the India's currency, the rupee, decreased 19 percent against the dollar between July and September of last year, prompting the amount of money sent home to jump.

"The nature of these flows, stable and large, will certainly aid the balance of payment and help reduce the current account deficit," Brinda Jagirdar, general manager of economic research at State Bank of India, relayed to the news source. "India's growth prospects still appear far better than most economies and this has helped remittance flows."

In addition to the devaluing of the rupee, another factor that may have driven more people to send money to India may have been related to the increased number of festivals that have been occurring in the country in recent months, according to industry expert Harsh Lambah. Lower interest rates of foreign currencies when contrasted with India's may have also played a role.

Meanwhile, in nearby Bangladesh, online money transfers have increased there as well, particularly in January. According to the country's central bank official, migrant workers sent home more than $1.20 billion in January alone, a record-setting pace, Bangladesh Bank Executive Director Ahsan Ullah indicated.

"January's remittance figure is the highest ever Bangladesh has received in a month," Ullah told Agence France Press.

Similar to the rupee, Bangladesh's form of currency – the Taka – has also devalued against the dollar, down 20 percent since January of 2011. Ullah said this may have been further reason for natives to send money to their home country.

The positive news may be a sign of what's to come, as Ullah told the source that he expects annual remittances will be in excess of $12 billion by June, which ends India's fiscal year. Last year, Bangladeshi migrants sent $11.65 billion in remittances.